Avila v. Southern Cal. Specialty Care, Inc. ( 2018 )

Filed 2/26/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ALEX AVILA et al.,
Plaintiffs and Respondents, G054269
v. (Super. Ct. No. 30-2016-00843634)
SOUTHERN CALIFORNIA SPECIALTY OPINION
CARE, INC., et al.,
Defendants and Appellants.
Appeal from an order of the Superior Court of Orange County, Nathan R.
Scott, Judge. Affirmed.
Giovanniello Law Group, Alexander F. Giovanniello, Karen A. Bocker,
Danielle M. VandenBos and Thomas C. Swann for Defendants and Appellants.
Valentine Law Group, Kimberly A. Valentine, Jennifer L. Turner and
Joseph F. Fighera for Plaintiffs and Respondents.
* * *
Southern California Specialty Care, dba Kindred Hospital – Santa Ana and
Kindred Healthcare Operating, Inc. (Kindred or defendants) appeal from the trial court’s
order denying its petition to compel arbitration as to the negligence and elder abuse
claims of now-deceased Antonio Avila (Antonio), and the wrongful death claim brought
by his son and survivor, Alexis Anthony Avila (Alex) 1 (collectively plaintiffs). The trial
court ruled that Alex’s wrongful death claim was not subject to arbitration. The court
further exercised its discretion under Code of Civil Procedure section 1281.2, subdivision
(c), 2 to refuse to enforce the arbitration agreement as to the remaining claims due to the
risk of inconsistent judgments. We find no error and affirm the order.
I
FACTS
In 2007, Antonio executed California’s statutory power of attorney form,
naming his son, Alex, as his agent. In March 2015, Antonio, age 87 at the time, was
transferred from another facility to Kindred, a long-term acute care hospital, suffering
from various conditions, including sepsis and chronic renal failure.
The next day, after Antonio had begun receiving care, Alex was presented
with a stack of documents, including a document entitled “Voluntary Alternative Dispute
Resolution (ADR) Agreement” (the agreement). Alex signed the agreement on Antonio’s
behalf.
The agreement provided for arbitration after mediation, with “submission to
arbitration as provided by California law.” It also refers to section 1281.6 (court
appointment of an arbitrator if the parties cannot agree) and Evidence Code section 1157
with regard to confidentiality of peer review proceedings.
1 We refer to the Avilas by their first names to avoid confusion. No disrespect is
intended. While “Alexis” is apparently the full first name of Antonio’s son, he is referred
to in his briefs as “Alex,” and we follow suit accordingly.
2 Subsequent statutory references are to the Code of Civil Procedure unless otherwise
indicated.
2
The agreement stated “any dispute as to medical malpractice,” in addition
to “any legal claim or civil action arising out of or relating to your hospitalization” was
subject to arbitration. “This ADR agreement also covers any claim or action brought by a
party other than you (e.g., an action by your spouse, legal representative, agent, heir)
arising out of or relating to your hospitalization . . . .” The agreement also included a 30-
day period in which to rescind.
On the signature page, immediately prior to the signature area, there is a
statement pursuant to section 1295, subdivision (b) stating that by signing, the signator is
“agreeing to have any issue of medical malpractice decided by neutral arbitration and you
are giving up your right to a jury or court trial.” The signature line under “name of
patient” was stamped “unable to sign,” and the signature was Alex’s, followed by the
word “son.” (Original capitalization omitted.) It was also signed by Alex under a
statement regarding his certification that he was authorized to act as Antonio’s agent.
According to the complaint, Antonio died within five days of admission as
a result of Kindred’s neglect. A dislodged feeding tube began infusing into the throat
and/or esophagus instead of the stomach, and Antonio’s impaired gag reflex was unable
to clear his lungs. He aspirated, resulting in cardiopulmonary arrest and rapid decline
until his death.
In March 2016, the initial complaint was filed on behalf of Antonio, “by
and through his successor-in-interest” Alex, and individually on Alex’s behalf. The first
cause of action for “negligence/willful misconduct” and the second cause of action for
elder abuse and neglect was on behalf of both plaintiffs. A third and final cause of action
for wrongful death was filed on Alex’s behalf only. In May, defendants filed an answer,
demand for jury trial, and notice of posting of juror fees. They also sent a letter to
plaintiffs’ counsel demanding dismissal of the lawsuit and proceeding to arbitration.
Plaintiffs declined.
3
In July, Kindred filed the instant petition to compel arbitration and motion
to stay. They argued there was a written agreement between plaintiffs and defendants
providing for arbitration of all disputes, and plaintiffs had refused their demand. Kindred
argued, among other things, that the Federal Arbitration Act (9 U.S.C. § 1, et seq. (FAA))
applied to the agreement, that no traditional defenses to contract law applied, and the
agreement was enforceable as to Alex as well as to Antonio. Defendants also contended
the agreement was enforceable under California law as well as the FAA.
In response, plaintiffs argued the agreement was unconscionable, and the
defendants had waived their right to arbitrate by their unreasonable delay. They further
argued that Alex was not a signatory to the agreement, which was unenforceable against
him, and the presence of his nonarbitrable wrongful death claim created the risk of
inconsistent rulings. Accordingly, they requested the trial court, in an exercise of
discretion, to retain jurisdiction. Defendants filed a reply in due course.
The trial court initially issued a tentative decision granting defendants’
motion, but after hearing argument, took the matter under submission. The court’s final
order denied the motion, concluding defendants had failed to show a valid arbitration
agreement with respect to Alex. The court exercised its discretion under section 1281.2,
subdivision (c), to refuse to order arbitration of the remaining claims, citing the risk of
inconsistent rulings.
Defendants now appeal.
4
II
DISCUSSION
Standard of Review
“‘“There is no uniform standard of review for evaluating an order denying a
motion to compel arbitration. [Citation.] If the court’s order is based on a decision of
fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the
court’s denial rests solely on a decision of law, then a de novo standard of review is
employed. [Citations.]”’” (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th
674, 686.) The issue of whether a third party is bound by an arbitration agreement is a
question of law. (Daniels v. Sunrise Senior Living, Inc. (2013) 212 Cal.App.4th 674, 680
(Daniels).)
“[T]he ultimate determination whether to stay or deny arbitration based on
the possibility of conflicting rulings on common questions of law or fact is reviewed for
an abuse of discretion. [Citation.] ‘The court’s discretion under section 1281.2,
subdivision (c) does not come into play until it is ascertained that the subdivision applies,
which requires the threshold determination of whether there are nonarbitrable claims
against at least one of the parties to the litigation (e.g., a nonsignatory).’” (Daniels,
supra, 212 Cal.App.4th at p. 680; see Acquire II, Ltd. v. Colton Real Estate Group (2013)
213 Cal.App.4th 959, 971 (Acquire).)
The FAA, CAA, or Both
Defendants argue the FAA applies to the agreement; plaintiffs argue the
California Arbitration Act (§ 1280, et seq.) (CAA) applies instead. The reason this is of
relevance here is because of the trial court’s exercise of its discretion under section
1281.2, subdivision (c), to refuse arbitration in certain cases. 3 Defendants claim that if
3 We will discuss the exercise of that discretion in due course.
5
the FAA applies, the trial court erred as a matter of law in applying section 1281.2,
subdivision (c). Defendants, however, are incorrect.
The FAA, which includes both procedural and substantive provisions,
governs agreements involving interstate commerce. The agreement does not mention the
FAA at all, although it does mention California law several times, including the statement
in the opening article, that disputes “will be determined by submission to arbitration as
provided by California law.” The agreement also provides that section 1281.6 will
govern if the parties cannot agree on an arbitrator, and Evidence Code section 1157 “shall
be enforced in any arbitration” under the agreement.
The procedural aspects 4 of the FAA do not apply in state court absent an
express provision in the arbitration agreement. (See Sanchez v. Valencia Holding Co.,
LLC (2015) 61 Cal.4th 899, 922 [even where agreement specifies FAA governs any
disputes, CAA governs procedures]; Cronus Investments, Inc. v. Concierge Services
(2005) 35 Cal.4th 376, 388-390; see Volt Info. Sciences, Inc. v. Bd. of Trustees (1989)
489 U.S. 468, 476-477, fn. 6; Los Angeles Unified School Dist. v. Safety National
Casualty Corp. (2017) 13 Cal.App.5th 471, 479-480.)
As noted above, the agreement here does not even mention the FAA, much
less expressly adopt its procedural rules. Accordingly, the FAA’s procedural rules do not
apply here. Any state law procedural provisions regarding arbitration are valid unless
they defeat the rights granted by the FAA to equal enforcement of arbitration clauses.
Defendants argue section 1281.2, subdivision (c), places arbitration agreements “on an
unequal footing than other contracts,” but do not cite any case where California or federal
courts that reach that conclusion. Indeed, there is ample case law to the contrary,
4 Among other things, the substantive portions of the FAA preempt state laws that
“discriminate” against arbitration agreements in particular. For example, California
cannot, under the FAA, adopt a judicial rule or statute proclaiming class action waivers in
arbitration agreements are invalid. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S.
333.)
6
including from the California Supreme Court, which has held that section 1281.2,
subdivision (c), does not defeat the rights granted by the FAA, and is therefore not
preempted. (Cronus Investments, Inc. v. Concierge Services, supra, 35 Cal.4th at p. 393.)
MICRA or Not MICRA
A key issue in this case is whether Alex is bound by the agreement.
Defendants concede that Alex did not sign the agreement in his individual capacity, but
as Antonio’s agent. But they argue that nonetheless, the wrongful death claim brought in
his personal capacity is subject to arbitration pursuant to section 1295.
Section 1295 is part of California’s Medical Injury Compensation Reform
Act (MICRA). It created certain requirements for arbitration agreements of “any dispute
as to professional negligence of a health care provider.” (§ 1295, subd. (a).) It defines
“professional negligence” as “a negligent act or omission to act by a health care provider
in the rendering of professional services, which act or omission is the proximate cause of
a personal injury or wrongful death, provided that such services are within the scope of
services for which the provider is licensed and which are not within any restriction
imposed by the licensing agency or licensed hospital.” (§ 1295, subd. (g)(2).)
Carving out an exception to the general rule that arbitration agreements
must be the subject of consent rather than compulsion, in Ruiz v. Podolsky (2010) 50
Cal.4th 838, 849 (Ruiz), the California Supreme Court held that section 1295 permitted
patients who consented to arbitration to bind their heirs in actions for wrongful death. (Id.
at p. 841.) It concluded that “all wrongful death claimants are bound by arbitration
agreements entered into pursuant to section 1295, at least when, as here, the language of
the agreement manifests an intent to bind these claimants.” (Ibid.)
7
The question, then, is whether Ruiz is controlling here, and we must
therefore determine whether this case is about “professional negligence,” as defined by
MICRA, or something else. Ruiz’s focus was on section 1295 and the intent behind it.
(Ruiz, supra, 50 Cal.4th at pp. 843-844, 849-854.) The court was “persuaded that section
1295, construed in light of its purpose, is designed to permit patients who sign arbitration
agreements to bind their heirs in wrongful death actions.” (Id. at p. 849.) Not only did
“section 1295, subdivision (a) contemplate[] arbitration ‘of any dispute as to professional
negligence of a health care provider[,]’” including wrongful death, but it “was part of
MICRA’s efforts to control the runaway costs of medical malpractice . . . by promoting
arbitration of malpractice disputes . . . .” (Ibid.)
In Daniels, the plaintiff sued a residential care facility (as distinguished
from a health care facility, as here) in her personal capacity. She alleged causes of action
for wrongful death, elder abuse, and related claims. She alleged the facility had failed to
properly care for her 92-year-old mother and caused her mother’s death. The defendant
unsuccessfully petitioned to compel arbitration under a clause in a residency agreement
the plaintiff signed on her mother’s behalf pursuant to a durable general power of
attorney. (Daniels, supra, 212 Cal.App.4th at p. 678.) The arbitration clause at issue,
like the one here, purported to bind the patient’s heirs. (Ibid.)
The Court of Appeal affirmed, rejecting the argument that Ruiz required
arbitration of the independent wrongful death claim. “Ruiz is based squarely on section
1295, which governs agreements to arbitrate professional negligence or medical
malpractice claims in medical services contracts with health care providers.” (Daniels,
supra, 212 Cal.App.4th at p. 682; see also Herbert v. Superior Court (1985) 169
Cal.App.3d 718.) Defendants argue vociferously that Daniels is irrelevant because the
defendant in that case was not a licensed health care provider. We disagree. What
matters is not the license status of the defendant, but the basis of the claims as pleaded in
the complaint. If the primary basis for the wrongful death claim sounds in professional
8
negligence as defined by MICRA, then section 1295 applies. If, as plaintiffs claim here,
the primary basis is under the Elder Abuse and Dependent Adult Civil Protection Act
(Welf. & Inst. Code, §15600 et seq.) (the Act), then section 1295 does not apply and
neither does Ruiz’s exception to the general rule that one who has not consented cannot
be compelled to arbitrate.
The complaint includes allegations that could be categorized as
professional negligence as well as elder abuse. There is at least some overlap between
the two. But the complaint was pleaded as one for “negligence/willful misconduct,”
elder abuse and neglect under the Act, and wrongful death. The complaint alleges a
“conscious and continued pattern of withholding the most basic care and services,” which
included a lack of monitoring, supervision, assistance, and other adequate care and
services. It alleges the lack of availability of a physician, failure to provide properly
trained staff and nursing, among other things.
“Neglect includes the failure to assist in personal hygiene, or in the
provision of food, clothing, or shelter; the failure to provide medical care for physical and
mental health needs; the failure to protect from health and safety hazards; and the failure
to prevent malnutrition or dehydration.” (Sababin v. Superior Court (2006) 144
Cal.App.4th 81, 88.) Under the Act, neglect “‘refers not to the substandard performance
of medical services but, rather, to the “failure of those responsible for attending to the
basic needs and comforts of elderly or dependent adults, regardless of their professional
standing, to carry out their custodial obligations.” [Citation.] Thus, the statutory
definition of “neglect” speaks not of the undertaking of medical services, but of the
failure to provide medical care.’” (Id. at p. 89.)
Plaintiffs, within the limits of established law, are essentially free to plead
their case as they choose. They chose to plead a cause of action under the Act, and they
did so successfully. The fact that they could have also pleaded a claim for medical
malpractice, had they wished to do so, is irrelevant. Accordingly, we conclude the
9
plaintiffs’ claim is not one within the ambit of section 1295, and therefore, Ruiz’s holding
does not apply. We next turn to the question of whether Alex actually agreed to arbitrate.
Applicability of Agreement to Alex
Having determined that section 1295 does not apply, we look to the general
rules governing arbitration agreements to determine if a valid agreement exists between
Alex and defendants. California has a strong public policy in favor of arbitration as an
expeditious and cost-effective way of resolving disputes. (Moncharsh v. Heily & Blase
(1992) 3 Cal.4th 1, 9.) Even so, parties can only be compelled to arbitrate when they
have agreed to do so. (Westra v. Marcus & Millichap Real Estate Investment Brokerage
Co., Inc. (2005) 129 Cal.App.4th 759, 763.) “Arbitration . . . is a matter of consent, not
coercion . . . .” (Volt, supra, 489 U.S. at p. 479.) Whether an agreement to arbitrate
exists is a threshold issue of contract formation and state contract law. (Id. at pp. 475-
476; see Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011)
197 Cal.App.4th 1146, 1153.) The party seeking to compel arbitration bears the burden
of proving the existence of a valid arbitration agreement. (Garrison v. Superior Court
(2005) 132 Cal.App.4th 253, 263.)
In California, a wrongful death claim is an independent claim. “Unlike
some jurisdictions wherein wrongful death actions are derivative, Code of Civil
Procedure section 377.60 ‘creates a new cause of action in favor of the heirs as
beneficiaries, based upon their own independent pecuniary injury suffered by loss of a
relative, and distinct from any the deceased might have maintained had he survived.’”
(Horwich v. Superior Court (1999) 21 Cal.4th 272, 283.)
In Daniels, the court rejected any claim that signing an arbitration
agreement as agent gave the agent’s consent to arbitrate independent claims, including a
claim for wrongful death. “Because Daniels signed the residency agreement solely as
agent and not in her personal capacity, there is no basis to infer that Daniels agreed to
10
arbitrate her wrongful death claim. In context, the provision making the arbitration
clause binding on heirs means only that the duty to arbitrate the survivor claims is
binding on [the mother] and other persons who would assert the survivor claims on [the
mother’s] behalf . . . . The agreement does not indicate an intent to bind third parties with
claims independent of the survivor claims, such as wrongful death claimants.” (Daniels,
supra, 212 Cal.App.4th at p. 681; see Monschke v. Timber Ridge Assisted Living, LLC
(2016) 244 Cal.App.4th 583, 587.)
Daniels relied on Fitzhugh v. Granada Healthcare & Rehabilitation
Center, LLC (2007) 150 Cal.App.4th 469 (Fitzhugh). In that case, the court rejected the
defense contention that signing an arbitration agreement as an agent also constituted an
agreement to arbitrate in a personal capacity. In that case, Ruth Fitzhugh was admitted to
a health care facility. Her husband George Fitzhugh signed two arbitration agreements as
her “‘Legal Representative/Agent.’” (Id. at pp. 471-472.) Each of the agreements stated:
“‘This arbitration agreement binds the parties hereto, including the heirs, representatives,
executors, administrators, successors, and assigns of such parties.’” (Id. at p. 472.) After
Ruth died, George sued the facility for wrongful death (among other causes of action).
(Id. at pp. 471-472.)
The court held that George was not required to arbitrate his wrongful death
cause of action. “It is irrelevant to the wrongful death cause of action whether George
Fitzhugh may have signed the arbitration agreements as the decedent’s ‘legal
representative/agent.’ Because there is no evidence that George Fitzhugh signed the
arbitration agreements in his personal capacity . . . there is no basis to infer that [he]
waived [his] personal right to jury trial on the wrongful death claim. [Citations.]”
(Fitzhugh, supra, 150 Cal.App.4th at p. 474, fn. omitted.)
Such is the case here. There is simply no evidence that when Alex signed
the agreement as his father’s agent, he had any intent to waive his right to a jury trial for
11
any personal claims. Accordingly, we find the trial court did not err by finding that no
agreement to arbitrate existed as to Alex.
Exercise of Discretion to Stay
The trial court ruled: “Even if decedent and his heirs are bound by the
arbitration agreement for survivor claims, the court exercises its discretion to ‘refuse to
enforce the arbitration agreement.’ [Citation.] Compelling arbitration of the survivor
claims would unreasonably risk ‘conflicting rulings on a common issue of law or fact.’
[Citations.]” As noted above, we review this issue for abuse of discretion. (Acquire,
supra, 213 Cal.App.4th at p. 971; Daniels, supra, 212 Cal.App.4th at p. 680.)
Defendants first argue, once again, that section 1295 makes section 1281.2,
subdivision (c), inapplicable. But as we already discussed, the provisions of MICRA do
not apply to this case. We therefore reject this argument.
As to the exercise of the court’s discretion, section 1281.2, subdivision (c),
permits a stay if: “‘A party to the arbitration agreement is also a party to a pending court
action or special proceeding with a third party . . . aris[ing] out of the same transaction or
series of related transactions’; and . . . ‘there is a possibility of conflicting rulings on a
common issue of law or fact.’” (Acquire, supra, 213 Cal.App.4th at pp. 967-968.) All
three requirements must be satisfied before section 1281, subdivision (c), may be used to
deny a motion to compel arbitration. (Id. at p. 968.)
Here, all three factors were met. Both parties are litigants in both the
survivorship and wrongful death claims. Those claims involve the same set of operative
facts. If the survivorship claims were arbitrated while the wrongful death claim was
litigated, there is a strong possibility of inconsistent rulings. The courts in Daniels,
supra, 212 Cal.App.4th at page 680, and Fitzhugh, supra, 150 Cal.App.4th at page 476,
each reached the same conclusion. We find, accordingly, no abuse of the court’s
discretion.
12
Public Policy
Finally, defendants argue “public policy” supports sending the case to
arbitration. While the law favors arbitration as an expeditious and cost-effective way to
resolve disputes, consent of the parties is required. (See Volt, supra, 489 U.S. at p. 479.)
“[W]e are not at liberty to ignore the well-established California law that ‘[t]he party
seeking to compel arbitration bears the burden of proving the existence of a valid
arbitration agreement.’ [Citation.] Even though it is true—as defendants point out—that
‘arbitration has become an accepted and favored method of resolving disputes . . .’
[citations], it is well settled that an arbitration agreement requires consent. Simply put,
‘“[t]he strong public policy in favor of arbitration does not extend to those who are not
parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute
that he [or she] has not agreed to resolve by arbitration.”’ [Citations.]” (Goldman v.
SunBridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1178.) We therefore reject
defendants’ tacit argument that “public policy” may override the lack of consent to
arbitration.
III
DISPOSITION
The order denying defendants’ motion to compel arbitration is affirmed.
Plaintiffs are entitled to their costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
ARONSON, J.
THOMPSON, J.
13